Asian Polyolefin Prices Tumble

Asian polyethylene (PE) prices slumped by $90-130/tonne last week on the eurozone crisis, the fall in oil prices and the imminent arrival in China of large volumes of Iranian material, according to ICIS pricing.

A further factor dragging down the market was the start-up, expected by end-May, of Qapco’s low-density polyethylene (LDPE) plant in Qatar, added ICIS.

Saudi Polymers is, in addition, due to bring on-stream two 550,000 tonne/year high-density PE (HDPE) plants and a 440,000 tonne/year polypropylene (PP) facility by the end of Q2 this year..

Asian polypropylene (PP) prices also fell last week, by $70-130/tonne, on the eurozone crisis and the decline in crude, said ICIS.

Disappointing economic data on China, which was released last week, is hardly going to help a market that has been struggling for months.

The bad economic data included:

*Growth in imports of just 0.3 percent in April compared with the same month last year. This was against forecasts of an 11 percent increase. The average monthly growth rate in imports during 2011 was 25 percent.

*Industrial production grew by 9.3 percent in April year-on-year, the weakest reading in three years and well below the 11.9 percent increase in March.

Financial markets, and maybe be the odd poyolefins trader, might take perverse cheer from the bad news on the grounds that it makes major economic stimulus by the Chinese government more likely. The fall in April inflation to 3.4 percent, from 3.6 percent in March, supports this view. This compares with the government’s 4 percent annual inflation goal.

But fellow blogger Paul Hodges made the excellent point last month that Chinese politicians were too pre-occupied, due to the biggest political crisis since Tiananmen Square in 1989, to spend much time focusing on the economy.